Privacy Self-Regulation Not Working, FTC Consumer Protection Head Says

Industry self-regulation has not only failed to protect people's privacy, but has also enabled companies that develop artificial intelligence to hoard consumer data.

That's according to Federal Trade Commissioner consumer protection head Samuel Levine.

“We’ve allowed companies to harvest consumer data without any real limitations, and now some of these some companies are creating opaque AI systems that capitalize on -- and accelerate -- their earlier hoarding,” Levine said at the annual conference of the National Advertising Division of the BBB National Programs, according to a written version of his prepared remarks.

“It seems, in other words, like one self-regulatory failure is begetting another,” he said.

He added that generative artificial intelligence “is already leading market participants to accelerate their data collection, with firm after firm changing their privacy policies to make it easier for them to collect even more data from us and use it in new ways.”

“Firms are racing in lockstep to supercharge their data collection,” he said.

Levine traced current data practices to a 22-year-old policy decision to support industry self-regulation on privacy -- a decision he called a mistake. The industry's self-regulatory program broadly involves notifying consumers about data collection, and allowing people to opt out of some uses of their information.

“I think we need to accept that self-regulation around digital privacy is not working. And I think we need to learn from these mistakes as we confront the next wave of emerging technology,” he said.

“In a sharply divided country, the fact that so many Americans are unhappy with how the digital economy is working is a damning indictment of our experiment in self-regulation,” Levine added, referencing a 2019 Pew Research Center report that 81% of Americans feel they have little to no control over data collection.

Lawmakers in a growing number of states appear to agree. As of today, 12 states have passed comprehensive privacy laws that aim to enable consumers to wield more control over their data.

Levine's comments come as the agency is still considering whether to curb what it calls “commercial surveillance” by issuing sweeping privacy rules. More than one year ago, the FTC took the first step toward regulations by seeking comments on a broad swath of topics, including online ad targeting.

Ad industry groups weighed in against new rules, while consumer advocates argued that new regulations are needed.

“Advertising is the lifeblood of the American economy,” the Association of National Advertisers said in comments filed with the agency last year. “The FTC should not presuppose that any kind of data-informed advertising is harmful without the administrative record necessary to support such a bold assertion.”

Advocacy group Public Knowledge took the opposite approach, arguing that “commercial surveillance” practices -- including online tracking -- are deceptive and unfair.

“Most consumers have no idea the breadth and depth of their intimate data collected through seemingly innocuous activities such as web browsing,” Public Knowledge wrote. “These practices are unfair to the average consumer, because it is nearly impossible for consumers not to be surveilled while they surf the internet.”

The FTC hasn't yet said whether it will move forward with potential national privacy regulations.

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